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Canadian Armed Forces to Receive New Search and Rescue Aircraft

News Release

For Immediate Release

December 8, 2016 — Trenton, Ontario — Government of Canada

Search and rescue is an essential public service for Canadians from coast to coast to coast. That’s why the Government of Canada is building a more agile, better-equipped military, while ensuring the best value for Canadians.

Following a rigorous, open and transparent competition, the Government of Canada today announced the awarding of a contract for $2.4 billion to Airbus Defence and Space to replace Canada’s fleets of CC115 Buffalo and legacy CC130 Hercules aircraft. The company has partnered with Newfoundland-based PAL Aerospace for maintenance and support services.The contract will provide a complete, modern and technologically advanced search and rescue solution, including maintenance and support services up to 2043.

As part of this contract, Airbus will provide 16 C295W aircraft, equipped with advanced technology systems, to support Canada’s search and rescue operations, construct a new simulator-equipped training centre in Comox, British Columbia, and provide ongoing maintenance and support services. The contract also includes options to extend the maintenance and support services for an additional 15 years. Should Canada choose to exercise these additional options, the contract value would increase to $4.7 billion.

The new technology being acquired includes state-of-the-art communications systems that will allow search and rescue personnel to share real-time information with partners on the ground. Using integrated sensors, crews will be able to locate persons or objects, such as downed aircraft, from more than 40 kilometres away, even in low-light conditions.

As part of its proposal Airbus Defence and Space has committed to make investments in the Canadian economy equal to the value of the contract, creating and maintaining good middle class jobs. Through Canada’s Industrial and Technological Benefits Policy, the company will incorporate many of Canada’s leading aerospace firms into its global supply chain and establish strategic partnerships with Canadian companies to ensure the aircraft are supported in Canada by Canadians. This work will help grow Canada’s innovative and strong aerospace sector, while providing well-paying jobs for the middle class and those working hard to join it.

Quotes

“In a country as large as Canada, our search and rescue personnel must have the right equipment to face the varying challenges they encounter every day. Working closely with partners through a fair, open competition, we have selected aircraft and advanced technology that will ensure the safety of Canadians from coast to coast to coast while providing good middle class jobs.”

The Honourable Judy M. Foote Minister of Public Services and Procurement

“Members of the Royal Canadian Air Force search and rescue community are among the best trained in the world and respond to incidents in every type of environment, whether in the Arctic, over the Rockies or in the middle of the ocean. Canadians in distress can count on them to give their very best to save lives. With this technology, we are giving our women and men in uniform the tools they need to continue to deliver effective and essential search and rescue operations.”

The Honourable Harjit S. SajjanMinister of National Defence

“Through the Industrial and Technological Benefits Policy, 100 percent of the contract value will be invested into the Canadian economy. Airbus Defence and Space will ensure that the maintenance, training, repair and overhaul work of the aircraft are performed in Canada which will create high-value, well-paying jobs for middle class Canadians and generate sustainability and growth for Canada’s aerospace and defence sector.”

The Honourable Navdeep BainsMinister of Innovation, Science and Economic Development

Quick Facts

The Canadian Armed Forces is responsible for providing aeronautical search and rescue operations. In collaboration with federal, provincial/territorial and municipal governments, as well as local search and rescue organizations, the Armed Forces respond to Canadians in distress across the country and at sea.

The initial contract for a period of 11 years is valued at $2.4 billion (plus applicable taxes) and includes 6 years of acquisition and set up, including the construction of a new training centre in Comox, British Columbia, as well as the first 5 years of maintenance and support services.

The contract is performance-based, which means the contractor will only be paid when equipment and services are delivered and accepted by Canada.

The contract also includes options to extend the maintenance and support services for an additional 15 years. Should Canada choose to exercise these additional options, the contract value would increase to $4.7 billion (plus applicable taxes).

A fairness monitor was engaged to oversee and report on the openness and transparency of the procurement process. The fairness monitor’s report identified no fairness‑related issues.

Canada’s CC115 Buffalo and CC130 Hercules have served Canada well over the last 20 to 40 years. These aircraft perform over 350 missions annually and are responsible for saving thousands of Canadian lives every year.

During the transition the existing fleets will continue to be maintained and operated to ensure search and rescue responsibilities.

Backgrounder

A modern and effective search and rescue solution for the Canadian Armed Forces

The Royal Canadian Air Force works with federal, provincial, territorial and municipal governments, as well as local search and rescue organizations to respond to Canadians in distress across our vast territory of over 18 million square kilometres.

The new aircraft will be stationed at the current main operating bases in Comox, British Columbia; Winnipeg, Manitoba; Trenton, Ontario; and Greenwood, Nova Scotia. The training school will be located in Comox.

Features

The new fleet of 16 C295W is a modern and technologically advanced solution that meets the Canadian Armed Forces’ operational requirements. The aircraft are well suited to perform in Canada’s harsh search and rescue environment, which is one of the largest, most challenging and diverse landscapes in the world. The new fleet will be equipped with advanced sensors and communications systems that provide a generational leap in technology, as compared to some of the current systems.

Overview of the contract

On December 8, 2016, Canada awarded a contract to Airbus Defence and Space to provide a new fleet to replace Canada’s Buffalo and Hercules search and rescue aircraft. The initial contract is for a period of 11 years, and includes acquisition of 16 C295W aircraft with associated training systems, construction of a new simulator-equipped training centre in Comox, British Columbia, and the first five years of maintenance and support.

The company will also complete infrastructure and set-up activities such as training and maintenance and support services programs, engineering services, as well as deliver tools and test equipment, spare parts and provide access to the necessary technical data.

The Government of Canada took great care to ensure that the contract was structured to provide highly reliable aircraft, services and parts, resulting in availability of the primary aircraft at each of the four Canadian Armed Forces base at all times, to support Canada’s critical search and rescue operations. Throughout the life of the contract, the company is incentivized to deliver on time and according to contract milestones.

The initial period of 11 years of the contract is valued at $2.4 billion (plus applicable taxes). This contract also includes options to extend the maintenance and support services by up to 15 years. Should Canada exercise all options, this would extend the contract to 26 years for a total overall value of $4.7 billion (plus applicable taxes).

Airbus Defence and Space

Airbus Defence and Space is a world-class company with a proven track record of delivering search and rescue aircraft and support with sales of 168 C295 aircraft in 23 countries. The company employs 38,000 employees and is the number one defence and space enterprise in Europe, among the top ten global defence enterprises and the second largest space business worldwide.

Full life cycle cost of Canada’s fixed-wing search and rescue fleet

The full life-cycle cost of the fleet is currently estimated at $14.7 billion. This is an all-inclusive “cradle to grave” estimated cost that covers everything required from project beginning to 2052, including:

The new fleet of 16 C295W

Project management costs

Flight crew personnel costs

Maintenance personnel costs

Training personnel costs

Contracted support costs, including spare parts, engineering support and maintenance instructions

Construction of new infrastructure (buildings) and modification of existing infrastructure

Operating and maintenance of new and existing infrastructure

Personnel support cost, which include health services, military police, Canadian Forces Housing Agencies

Fuel

Aircraft disposal

The calculation of a full life cycle cost also includes contingency to account for risk and uncertainty in the estimate.

Delivery Schedule

The first aircraft will be delivered and training will begin in 2019. Construction of the new training centre in Comox is expected to begin shortly after the contract award. The final aircraft are expected to be delivered in 2022.

Fixed-wing search and rescue aircraft procurement process

Extensive industry engagement activities were conducted as part of this procurement process. The process involved issuing 30 letters of interest over three years, with Canada receiving 176 formal responses from companies. It included two industry sessions with over 200 participants, pre-qualification of six potential bidders and conducting seven multi-day, one-on-one meetings with bidder teams. It also included organizing visits of potential bidders to the four main operating bases as well as a tour of a Joint Rescue Coordination Centre.

A capability-based approach was used to leverage industry expertise to decide on the numbers of aircraft and where the bases would be located to achieve Canada’s required search and rescue outcomes.

A request for proposals was issued on March 31, 2015, and potential bidders had until January 11, 2016, to provide their proposals (three bidders provided proposals). Bidders were offered the option to provide Canada with a submission prior to closing of the bid process, for a preliminary assessment of their proposed response to key requirements.

Proposals were analyzed using a robust evaluation process, which was reviewed by an independent third party to ensure they were consistent with the objective of promoting a best value procurement and did not inadvertently favour any aircraft or bidder. As a result, two bidder proposals were found compliant. The bid evaluation also included ground and flight testing conducted on their proposed aircraft, at the manufacturers’ facilities.

The winning company obtained the highest overall combined score for capability, cost and benefits to Canada. The proposals were evaluated on the basis of the following elements:

Capability (worth 65 points) – search and rescue response performance, aircraft and system characteristics, in-service support program, as well as capability to deliver on potential risks, and ground and flight testing.

Cost (worth 25 points) – detailed pricing on the cost of acquisition and option years.

Economic Benefits to Canada (Industrial and Technological Benefits (ITB) Policy including value proposition) (worth 10 points) – commitment to undertake business activity in Canada equal to the contract value for both the acquisition and maintenance and support services.

The Government’s Industrial and Technological Benefits Policy applies to this procurement process, which requires Airbus Defence and Space to make investments in Canada equal to the value of the contract. Canada has a world-leading commercial aerospace and defence sector, which is reflected in the winning bidder’s proposal. Many of Canada’s top aerospace and defence firms will be integrated into a new global supply chain. Canadian industry will manufacture key components of the aircraft, such as the engines manufactured by Pratt & Whitney Canada and mission systems components manufactured by L-3 Communications Wescam and Lockheed Martin Canada.

Airbus has engaged in a strategic partnership with PAL Aerospace to create a joint venture, – called AirPro, that will work to manage the maintenance and support program in Canada. CAE, Canada’s leading training and simulator manufacturer, will be responsible for designing, developing and manufacturing the training solution for Canada, including simulators. Additional partners that will contribute to maintain this capability include Heroux-Devtek to repair landing gear; Hope Aero to repair propellers; Sonovision for technical publications; CLS Lexi-Tech for translation of publications; and, Precision Aero to repair component parts on the aircraft.

This is expected to create significant high-value, well-paying jobs for middle class Canadians and generate sustainability and growth for Canada’s aerospace and defence sector, including small and medium-sized companies across the country.

A fairness monitor was engaged to oversee and report on the openness and transparency of the procurement process. Throughout the procurement process, the fairness monitor was present to observe events and interactions with industry, and oversee preparation and dissemination of documentation. The fairness monitor’s report identified no fairness related issues.